Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 17 - No. 36)
In a partnership, what is the purpose of an appropriation account?
To calculate the gross profit.
To show the distribution of profits.
To determine the cost of goods sold.
To track individual partner's capital contributions.
Explanation
The appropriation account shows how the net profit is distributed among the partners, considering elements like interest on capital, salaries, and profit-sharing ratios.
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